Monthly Archives: January 2015

Congratulations Corey

congratulations

This is perhaps one of the most gratifying parts of my job as a collegiate educator.  Recognizing student accomplishments and achievements is the payoff after observing the intellectual growth of students over time.  As the father of three adult daughters, I am very familiar with the sense of pride that comes with recognizing the early successes of young people.

The subject of my pride and congratulations today is Ferris State University student Corey Bledsoe who just learned that he has been selected as an Anita Benedetti Scholar for the upcoming RIMS annual conference in New Orleans.  Corey is a dual major in actuarial science and also risk management and insurance, and he is President of the Gamma Iota Sigma-Upsilon Chapter at Ferris State.  Corey is now making plans to attend the RIMS conference with his costs covered by RIMS and he will participate in a special program track designed for the Anita Benedetti Scholars.

This RIMS program is very competitive and Corey should be very proud of his selection, as am I.  He will represent Ferris State’s Risk Management and Insurance academic programs very well, and I know that he will make some valuable contacts and learn a great deal through his participation in this program.  Well done Corey! Congratulations!

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Selling Insurance

sales_marketing

Sales.  Insurance.  For some, these two words used in close proximity will send them running far, far away.  Let me be clear about one thing – A career in insurance is not restricted only to selling.  Risk and insurance careers are as wide and varied as one can imagine.  The industry needs underwriters, customer service reps, information technology experts, business analysts, claim adjusters, premium auditors, risk managers, finance and accounting, loss control reps, just to name a few.  And yes, sales.

Every business and every industry has a sales function.  For whatever reason, insurance sales gets a bad rap, right up there with used car sales.  To be sure, it is a challenge selling an intangible product that is basically a contract full of promises based only on the remote possibility of bad stuff happening.  But here’s the thing… everyone needs this product in some fashion or form.

I was meeting with a group of insurance professionals earlier this week and the irrational fear of a career selling insurance came up.  One of the esteemed insurance professionals offered a very astute observation about insurance sales.  Businesses must have insurance of various types to comply with bank requirements, contract stipulations, and just to secure their own survival.  Individuals must have insurance if they drive a car, get a mortgage to buy a home, or act responsibly toward their dependents.  His point was that businesses and individuals will write a check to someone for insurance, and all you have to do as a seller of insurance is convince them that they should write that check to you.

This is not to say that selling any product or service is easy, but when you consider the open-ended, long sales cycle challenges that face many sales professionals for other products, the insurance product/service has an advantage.  In my former life, I owned a firm that provided risk management services which certainly provided value to my customers, but they were rarely mandated by any legal or contractual conditions.  Consequently, my sales team found that many prospective customers kept putting our services on the “back burner” as more pressing issues grabbed their attention.  We had prospects who never did “pull the trigger” and sign up for our services, and others took 2-3 years before they finally decided that they would buy our services.  Long sales cycles like that are not fun.

Insurance protection for most consumers and businesses is not something they can put on the back burner, at least not for long.  They are going to write a check.  Become an insurance sales professional and convince them to write that check to you.  It’s a good life and a good career.  Honest, I’m not kidding.

Scholarships aplenty

scholarship-money

Providing yet another bit of evidence that the risk and insurance industry is encouraging young people to consider insurance careers, it has been a busy week in terms of scholarship news.  Business Insurance just reported that the Griffith Insurance Education Foundation awarded over $100,000 in scholarships last year.   Locally, there are several scholarships offered by insurance agencies and professional organizations.  Just this week, I had a conversation with a representative of the Muskegon Adjusters Association, a professional organization of West Michigan claim adjusters.  This organization wants to begin awarding annual scholarships to Ferris State students of risk management and insurance.

From my perspective, there is no more clear statement that the industry wishes to attract talented, young professionals than the multitude of industry organizations who are willing to pay for students to gain an education in the field.  I keep a list (which seems to be getting longer and longer) of scholarship opportunities on my desk, ready to share with students.  So come and get it.  The money for your risk and insurance education is out there – just waiting for deserving and dedicated students to claim it

TRIA Extended – Is that a good thing?

terrorism

In recent weeks, the renewal/extension of the Terrorism Risk Insurance Act (TRIA) has been a very hot topic.  I’ve written about it a few times myself, here and here.  To the relief of many, the newly convened 114th Congress has now extended TRIA to 2020.  The House vote was 416 to five, in a rare display of unfettered bipartisanship.

But not everyone is happy about TRIA’s extension.  The Wall Street Journal’s Opinion Page called the measure’s renewal a “vast corporate welfare handout.”  Though this may be blasphemy among my risk management and insurance colleagues, I must confess to my libertarian leanings and admit that I am sympathetic to the WSJ editorial board’s disappointment.  On the other hand, I do take issue with some of the WSJ’s assertions.  In particular, the WSJ stated that “The private [insurance] market has healed [since the 9/11 attacks] and could price in and model the danger of terror attacks, but the permanent Washington backstop interferes with such commercial evolution.”  I’m not so sure I buy that.

Terrorism risk, particularly anything on the scale of the 9/11 attacks, is very difficult to price and model.  Among the textbook concepts that my students learn are the characteristics of insurable risks, and two such characteristics are that the loss potential should not be catastrophic, and the chance of loss must be calculable.  House fires and slip/fall liabilities meet all of the criteria for insurable losses, but using commercial airliners as weapons of mass destruction or detonating dirty bombs most definitely do not meet the aforementioned criteria.

The plain truth is that 9/11 changed everything.  Before that catastrophic event, terrorism exclusions were rare.  After 9/11, terrorism exclusions are all but certain in the absence of the federal backstop known as TRIA.  My libertarian economic philosophy is conflicted over this reality, but I would not characterize TRIA as a “vast corporate welfare handout” as the WSJ did yesterday.

Happy New Year 2015 (and Insurance Shopping)

2015

Out with the old and in with the new.  Welcome to 2015.

Speaking of new, there are undoubtedly a large number of new insurance policies issued with January 1, 2015 effective dates for which terrorism insurance coverage has been scaled back or eliminated after the U.S. Senate failed to extend the Terrorism Risk Insurance Act (TRIA) before the holiday recess.  Conventional wisdom suggests that this matter will be taken up anew in the first few days of the new Congress.  Risk managers and insurance carriers both hope that proves to be true.

And now for something completely different… (with apologies to Monty Python’s Flying Circus for borrowing their title/catchphrase)

There is something about the turning of the calendar to a new year that just naturally causes the human species to ponder random subjects and of course, resolve to make changes.  Lately, while enjoying time with family and friends (and way too much food), I have been wondering about how typical consumers make insurance purchase decisions.  Weird, I know.

Insurance is not like most other consumer products such as televisions, appliances, clothing, and restaurant meals.  For those types of purchases, consumers generally get a little but excited and willingly research the attributes of various competing products.  Comparisons of features are matched with the consumer’s personal values and desires, and ultimately the consumer chooses the product that best suits their needs for the best price (i.e., value).  Why should insurance be any different?

Well, for starters, I don’t know anyone who gets excited about purchasing insurance.  I also don’t know anyone who has done much more than high-level product research and comparison of insurance products save for one attribute:  PRICE.  For most insurance consumers, it all comes down to price and they turn a blind eye to the differences in insurance coverage between competing insurance companies.  To be fair, it’s not easy for the average consumer to make such comparisons because the insurance contract isn’t delivered to the consumer until after purchase.  And even then, reading and understanding the nuances of insurance contract language is not for the faint of heart.  Furthermore, standard insurance policy forms are often used by insurance carriers thereby giving the impression that all insurance policies are identical, despite that fact that individual carriers do tweak their insurance contracts.

So the industry tends to fall back on nifty marketing gimmicks to differentiate themselves (e.g., vanishing deductibles, new car replacement, etc.) and as always – service.  Each carrier wants the consumer to believe that no one can provide policy and claims service better than they can.  What it all boils down to is whether or not consumers can make rational insurance purchase decisions in the current insurance marketplace?  If comparing insurance coverage attributes is really that difficult, then what is the consumer left with to base their purchase decision on other than price?

I smell a research project brewing here…  Happy 2015!